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The Cable TV bill showed up today with the annual price increase. (Actually, I don’t have Cable TV. I only purchase internet service, and the CATV provider is also the internet provider.) I’m sure many of you know, but in case you didn’t, these companies typically offer a 12-month introductory price for new customers. Then, after 12 months, they automatically increase the price. In my case, it’s a fairly significant 33% increase!

The Dance

With several of these companies, you can call them up and ask for a price reduction. Years ago, all you had to do was to take 2 minutes out of your life to call them, nicely ask for the reduction, and they happily gave it to you instantly. Over the years, it has become more and more difficult to do so. It has become a dance, sort of a tango, to go back and forth with them, trying to convince them to retain you as a customer. These companies know that it’s easier (and cheaper) to retain a customer than it is to lose them and try to win them back later.

Thinking it’s easier to catch flies with honey than vinegar, I put a big smile on my face and called up my CATV (internet) company. Figuring that these people are only doing their job, there’s no point in being mean or demanding of them. When the agent answered and asked me what she can do to help, I replied, “I’m calling to help you retain me as your customer.” I explained that I liked their service, that I don’t need any more or any less features, and that I just wanted to pay the price that I used to. She replied with the standard, “Let me see what I can do for you.” She put me on hold (more of the game), came back and said, “I’m sorry, but the only thing I can do for you is actually more expensive than your new price.” I said that wasn’t what I was hoping to hear, and asked to talk to the “customer retention department”.

Stepping up the Game

What I didn’t expect with this call was what came next. She explained that things aren’t like they used to be. They used to be able to renew those introductory low prices, but they can’t anymore. Speaking with her manager wouldn’t do any good. I explained that I was leaving the country on travel for 2.5 weeks, and that I’d even quit being a customer. I’d do that, because after 1 month, I could re-join as a new customer at the new customer introductory prices. Here I was, saying I was going to quit their service, and she wasn’t willing to budge on price.

She continued to say that times are tough, and she and all of the agents are getting judged on customer satisfaction surveys, and it’s in her best interest to keep me happy. She even went on to say that she could lose her job if people like me aren’t satisfied. With a smile on my face (so she could hear me being nice and polite), I again asked to speak to the retention department. She was actually getting a little livid at this point, saying that they can’t do anything for me, and that I shouldn’t be so upset with her. I explained that I understand that this was just a little dance that we have to do and I didn’t blame her. She again insisted that this wasn’t the case, and this is all the company can do for me, but if I really wanted to talk to her manager, she would connect me. I said, “Yes, please.”

After I was connected to her manager, I again explained that I just wanted to give them an opportunity to retain me as a customer by keeping my price the same as it was before. He said he would check, and put me on hold. A few seconds later and he said that they could do it (contrary to what the first person said they absolutely couldn’t do anymore). It’s all a big scam. A big sob story to get the weak-willed people to give up and just keep paying 33% more.

I’m glad to be back at the original new customer “introductory” price for another 12 months. Don’t be afraid to call and (nicely) ask to have your rates reduced, and don’t let them fool you that they can’t do that for you.

It’s that time of year when employers tell us about how medical coverage has changed (been reduced) for next year, what the premiums are (been increased), and ask you which one you want to be stuck with for the year. I don’t know about you, but it’s a tough decision for me. You can’t change your mind mid-year, should some new sickness ail you, or heaven forbid, you get into an accident. My daughter and I are pretty healthy, but I’m getting to the point where I should probably see a doctor more often. I don’t even always go get my 100% covered (free) annual physical.

It seems like, at the companies that I’ve worked for, that the 3 healthcare choices you get are fairly similar coverage (80% covered, after meeting the deductible), but with different deductibles and therefore different monthly premiums. So if coverage is nearly the same, how does one determine which plan to go with? Of course, it depends upon the relative health of you and your family members, how often you normally see a doctor, and if you expect that to change within the next year. Something to also consider is what your maximum out of pocket expense might be if something catastrophic was to happen, such as an automobile accident, heart attack, or serious injury from skydiving, rock climbing or your favorite adrenaline activity. While you can’t plan for that to occur or not occur, you don’t want to be left with an outrageous medical bill if that was to happen.

Graphing your options

For years, I’ve created my own spreadsheet from scratch to compare the plans and graph the results. I plot how much it will cost me from my pocket for various medical expenses incurred through the year. The costs includes the per-paycheck premium, the 100% cost up to the deductible, the 20% co-pay up to the out of pocket maximum, and the out of pocket maximum itself. The graph illustrates how much it costs me if I’m perfectly healthy, visit a doctor for some minor things, regularly see a doctor, or have a major medical issue such as a lengthy hospital stay. Because there are usually different deductibles for an individual versus the entire family, there are graphs for each case.

An example is below. By looking at this graph, it’s easy to see that Plan C is the lowest cost, regardless of how many times you see the doctor. This is true if the coverage is the same, meaning you can see the same doctors, the hospital bills would be identical, and only the premiums, deductibles and max out of pocket amounts are different. Whether you never saw a doctor for the year, had $5000 of medical services, or had $35,000 of medical services, Plan C’s total cost (Premiums, Deductibles, and Co-Pays) are lower in all cases.

This is an easy decision for Plan C

It isn’t always that easy. Here’s my actual situation, and if only one family member receives medical care through the year. In many medical plans, the individual deductible is half of the family deductible, but in this case, Plan C has a large deductible that’s the same for a single family member or the entire family. The large deductible must be met before the plan starts paying out anything. In this case, Plan C deductible is $4000. If I incur somewhere between $2500 and $19000 of medical bills, Plan C is no longer the least expensive choice. In fact, it’s about $1000 more expensive than Plan B. Unless the bill is over $20,000, then Plan C is the cheapest, in this case due to the lower max out of pocket limit.

No clear low-cost winner here

Enter the HSA Savings

But…what’s not included above is the fact that Plan C is actually a High-Deductible Health Plan (HDHP). From Wikipedia: “A high-deductible health plan (HDHP) is a health insurance plan with lower premiums and higher deductibles than a traditional health plan. Being covered by an HDHP is also a requirement for having a health savings account.” That health savings account (HSA) is a beautiful thing where you can save PRE-TAX dollars, and later use that money to pay for qualified medical expenses, including your deductible and co-pays, as well as other things like dental, vision and prescriptions. For many people, this means 15, 25% or 28% savings on Federal taxes, as well as State taxes, which is 6% here where I live. That’s a 31% savings in my case. Now, factoring the HSA savings into the equation, the graph looks like this:

Now once again, the choice is easy. No matter what my medical expenses are, the Plan C (HDHP) with HSA tax advantage is the lowest cost choice.

After I went through this exercise, a friend found this website that does all the graphing for you. Just add in the pertinent information for your plans. If you don’t plan on going out of network, you don’t need to fill in those figures. It doesn’t figure out your tax advantage for an HSA, but the rest it does very well.

From health-plan-compare.com, they look the same!

Hopefully you can use this information to help you with your next healthcare plan election, minimizing your cash outflow regardless of how much medical services you expect, or don’t expect, to be billed next year.

One of the local radio stations was having listeners call in to answer the question, “What are you going to spend your tax refund check on?” I didn’t even want to listen to the responses. I knew most, if not all, would be about the purchase of frivolous material goods. As if the IRS is their interest-free layaway program. Due to a planning mistake on my part, I too was about to get a very sizable refund. Enough to buy several tech gadgets, fancy clothes, some bling like a new watch, and still have money left over to go on vacation for a couple weeks to an all-inclusive resort. So what was I going to buy? All of them…I “deserve” it. Right? Wrong. Such is not the way of someone trying to retire early. I can’t wait to get my refund check, only to immediately turn around and deposit it into my brokerage account. Every single penny of it. One step closer to retirement.

The cost of convenience…is synonymous with burning your money. I’m amazed at how much money people waste for convenience. Buying fruit that’s already peeled and cut up (and spoils sooner). Buying hamburger meat that is already pre-formed into a shape of a burger (for a 40% increase in price).

Here’s a big one I learned today. It’s finally nice outside and I felt like grilling some burgers, except my tank was out of LP. I looked online at the local big box stores for their price of exchanging cylinders. It was $16-18. And then something caught my eye. It said that the tanks are filled with 15 lbs of propane (LP). I thought, “That’s weird. These are 20 pound bottles. Why only fill 75%?” This is a trend we’ve been seeing a lot lately, especially in the grocery store. They decrease the size or amount, and charge the same or even more for it. A great example is ice cream from the store. The cartons were always a half gallon. Now they are 1.5 quarts (75% of a half gallon). Our minds are programmed to think they’re the same size as always. Or gigantic boxes of cereal or big bags of chips, that are only half full. You think you’re getting the full amount, like for the LP tank. After all, the tank is the same size, but since you can’t see it in, you can’t see that they’ve only filled it 3/4ths.

In the case of the propane, the next thing I did was to call a business that fills propane bottles. Remember when we used to do that, because there was no convenient exchange? They charge $1.99 per gallon. It took a short investigation to find out that it takes 4.7 gallons to completely fill 20 pound tank. That’s with 20 pounds, not 15. So, 4.7 gallons * $1.99/gallon = $9.35 for 20 lbs. The cost of convenience of an exchange is $16-18, for only 15 lbs. The exchange works out to about $5.00/gallon vs. the $1.99/gallon at the filling station. That’s 2.5 times as much. Wow. It didn’t take that much longer for the nice lady to fill up my tank (plus we a nice conversation) versus the “convenience” of exchanging it at a kiosk at the big box store. I might as well put a $10 bill in the burner on the grill. That’s like burning money.